Exit strategies are a fundamental part of the investment process. The investors that approach an opportunity to invest in private equity want to know exactly what the future will look like for their position. An exit strategy is actually one of the best ways to secure investments and raise capital during the first financing rounds, so entrepreneurs should make it a key element of their business plan and the force behind their growth strategy.
When it comes to exit strategies, entrepreneurs and business owners have a lot of options to choose from, and each has their own pros and cons. Deciding on an exit strategy beforehand will not only give investors an accurate landscape of the company’s future, but it will also outline the necessary steps a company must take in order to reach that milestone. An exit strategy, after all, is executed when a business venture has met its profit objective, and not before.
The most common process when it comes to providing a liquidity exit for investors is the Initial Public Offering (IPO). An IPO consists of the issuance of a private company’s stock to the general public. It allows both existing investors to see returns and new, public investors to participate in the offering. One of the reasons why it is the most commonly used exit strategy by private companies is the benefits it can offer: growth, expansion, transparency and credibility.
However, an IPO has significant downsides that make it less than ideal for entrepreneurs or company owners. For starters, the process of launching and completing an IPO can take more than a year to be finalized. During that time, there are substantial costs involved in the process, and companies can reach the end of the offering having spent thousands and thousands of dollars.
Luckily, there are many options to choose from when it comes to an exit strategy and liquidity for investors. And more and more private equity platforms like InvestHub are providing companies with an exit strategy to offer investors and simplify the capital raising process. InvesHub will give companies the opportunity to list their equity on the secondary market of its sister company, Capitalista. Companies that successfully complete their financing rounds will be offered the possibility to be listed on the Capitalista secondary market, where investors will be able to buy and sell any tradeable asset in the world.
Both entrepreneurs and investors will find financial solutions in InvestHub. Companies that are looking for funding will be able to connect with investors regardless of their industry, jurisdiction, or size. Investors, both individual and institutional, from angel to amateur, will be able to access the best investment opportunities. Complementing these services with financial education for entrepreneurs on how to improve their business, InvestHub will redesign the financial journey by offering an exit strategy built within companies’ business plans, benefiting both companies and investors. Simple, efficient and accessible. Raising capital and investing reaches an entirely new level with InvestHub.